‘Making Money’ host Charles Payne discusses 401(k) savings with Walser Wealth Management president Rebecca Walser and what it says about Americans’ retirement.
A 65-year-old retiring in 2025 can expect to pay $172,500 on average for healthcare and medical expenses throughout retirement.
That’s according to Fidelity’s 2025 Retiree Health Care Cost Estimate, which is up 4% from the year before. It highlights the general upward trajectory of health-related expenses that have occurred since Fidelity’s first estimate of $80,000 in 2002.
The report underscores an even bigger issue: 17% of all respondents have taken no action at all when it comes to planning for health expenses in retirement. One in five respondents said they never consider healthcare needs during retirement. With Gen X, that rises to about one in four.
HEALTH CARE COSTS FOR RETIREES CONTINUE TO SOAR
Fidelity’s estimate assumes enrollment in Medicare (Parts A and B) and Medicare Part D, which includes premiums, co-payments and other out-of-pocket costs for medical care and prescription drugs.
An older couple is sitting at their kitchen table reviewing financial documents. (Getty / Getty Images)
However, it does not include long-term care expenses. For instance, even with Medicare, retirees are responsible for Medicare premiums, over-the-counter medications, dental and vision care as well as other types of added expenses like long-term care, according to Fidelity. Some of those costs can be offset with enrollment in Medicare Advantage plans, but those require separate monthly premiums.
Chandler Riggs, vice president of financial consultancy at Fidelity Investments, told FOX Business that the rise in healthcare costs is driven by several factors, notably longer life expectancies, as well as a healthcare inflation rate that has outpaced general inflation.
Despite the daunting figure, Riggs called Fidelity’s estimate an “important wake-up call for all generations.”
“It’s not just a benchmark for retirement readiness but also underscores the importance of planning as early as possible,” Riggs said.
SOCIAL SECURITY CONFIDENCE HITS 15-YEAR LOW AS YOUNGER AMERICANS INCREASINGLY LOSE FAITH IN SYSTEM
Matthew Gregory, planning director for private wealth management firm The Bahnsen Group, said people grow accustomed to a hands-off approach during their working years since a meaningful piece of the cost can come directly out of their paycheck.
An elderly man talking to a psychologist at a mental health, psychology and therapy clinic for a session. (Getty / Getty Images)
“They may not be thinking about the need for supplemental coverage on top of Parts A and B of Medicare, as well as the fact that Medicare does not cover most long-term care costs. Those expenses can snowball quickly and become a reality check,” he said.
Likewise, Riggs said that people who have health coverage through their employer won’t consider how they’ll cover medical expenses when they retire and are no longer enrolled in their employer’s health plan.
This wake-up call for people near retirement could force them to question whether they have saved enough for retirement, if they can accomplish their goals with the funds they have and if they need to delay retirement entirely.
“They may also end up settling for a level of coverage that is far less than they would otherwise be comfortable with or leaning on family members to fill gaps in care,” Gregory said.
This data comes shortly after an AARP study found Americans’ confidence in Social Security – often seen as a safety net program because it provides a financial foundation for retirees – was also on the decline.
The data, which was published earlier this week, showed that Americans’ overall confidence in Social Security dropped from 43% in 2020 to 36% in 2025, the lowest level since it fell to 35% in 2010.
Despite these findings on retirement readiness and growing uncertainty about long-term financial support, Riggs underscored that there are always steps someone can take to better position themselves financially, regardless of where they are in their retirement journey.
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Riggs said saving early and leveraging accounts where savings can be invested are powerful tools to build a “healthcare nest egg, regardless of age.”
Saving early and leveraging accounts where savings can be invested are powerful tools to build a “healthcare nest egg, regardless of age,” said Chandler Riggs, vice president of financial consultancy at Fidelity Investments. (Getty / Getty Images)
Additionally, Riggs said employees who are enrolled in an HSA-eligible health plan should consider using a health savings account.
For one, the triple-tax advantage of HSAs makes them a versatile tool to save and pay for health expenses. The contributions are tax-deductible, and the HSA dollars can be spent tax-free when used for qualified medical expenses. Any potential growth in money invested is tax-free as well, Riggs said.
